Posts Tagged ‘joe nocera’
Putin Plays Hardball
This week marks the fifth anniversary of Sergei Magnitsky’s death in a Russian prison. He was 37 years old, a member of the emerging middle class who worked as a lawyer for a man named Bill Browder, the leader of the largest Russia-only investment firm in the world. Browder’s company, Hermitage Capital Management, started with $25 million during the Wild West-era of early Russian capitalism and had $4.5 billion in assets by the early 2000s.
Over time, Browder became an activist investor of sorts, exposing corruption in Russian companies and trying to make Russian capitalism more transparent. In doing so, he thought, he could both steer Russian companies a little closer to the Western model while also making money for his firm.
But, when Vladimir Putin became the president of Russia in 2000, he and his cronies were not interested in corporate transparency. How could they line their pockets if everything was transacted out in the open? So Browder became persona non grata. After a trip to Britain in 2005, he was refused re-entry. A few fictitious documents later, and Hermitage had $1 billion in “liabilities.” Then, a handful of officials involved in a takeover of Hermitage requested — and received within 24 hours! — a $230 million tax refund. It was a textbook example of the kind of corporate pillaging for which the Putin kleptocracy became infamous.
Browder pleaded with Magnitsky to flee the country, as his other lawyers had done. But Magnitsky insisted on investigating — and speaking out about — the fraud that had taken place. For his troubles, he was imprisoned in 2008. By summer of 2009, he had developed pancreatitis, which went untreated despite his pleas. He died that November. Browder says that when he learned of Magnitsky’s death, it was “the worst news I had ever received in my life.”
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The New Russian Mob
I realize this is a somewhat irresponsible thought, but I keep wondering why anyone should care if some Russian oligarchs and businesses — and corrupt officials — lose a bundle in Cyprus.
Yes, I know, the European Union’s original, ham-handed proposal — a tax on every bank deposit in Cyprus — was potentially destabilizing to the world’s financial system. It raised the specter of bank runs not just in Cyprus but all over Europe. It served as a jolting reminder that the European crisis is still with us. Yada, yada.
But it also turns out that much of the hot money held in the Cypriot banking system is Russian. Russian companies like the low taxes that come with having entities in Cyprus. Because of the wink, wink, nod, nod relationship between Cyprus and Russia, rubles deposited in Cypriot banks are as untraceable as dollars once were in Swiss bank accounts, according to Dmitry Gudkov, an opposition politician (about whom more in a moment). Corrupt officials who embezzle money have long found Cyprus to be a friendly haven. Bloomberg Businessweek reported earlier this week that a substantial amount of the $230 million fraud perpetrated in 2007 against Hermitage Capital — a crime unearthed by Sergei Magnitsky, the brave lawyer who died in prison after he exposed the fraud — can be traced to Cyprus.
To put it another way, the henchmen of Russia’s president, Vladimir Putin, who have gotten rich by trampling over the rule of law, are now getting a taste of their own medicine. In Cyprus, with no warning, the rules changed, and deposits larger than 100,000 euros may now face “haircuts” of as much as 40 percent. Though the purpose of the tax is to save the country’s banking system, the outcome is the same as when Russian officials create phony tax charges to steal a businessman’s assets. People feel they are being robbed. And they become extremely upset.
The funniest part is that according to Reuters, some Russian entities are threatening to sue. Actually, that makes a certain perverse sense: one of the reasons Russian bureaucrats are so quick to move their newly stolen wealth out of Russia is that they want it in a place where the rule of law actually has some meaning. They don’t want done to them what they’ve done to their fellow citizens.
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How Not to Pass a Bill
Among the many things the House never got around to doing before shutting down for the summer was holding a vote on a bill that would have granted permanent normal trade relations to Russia.
Please don’t turn the page.
Yes, compared with its inability to pass a farm bill, this may sound like small potatoes. But it is a near-perfect illustration of the way the House Republican leadership has largely abdicated its responsibility to get useful things done — as opposed to, say, conducting votes to repeal Obamacare a few dozen times.
There wasn’t much controversy over the Russia bill. Business supported it because American companies could then take advantage of Russia’s imminent entry into the World Trade Organization. It would have required repealing the old Jackson-Vanik amendment, which links trade to the emigration of Russian Jews. But that’s been a nonissue for decades. The Senate was lined up to pass the bill quickly once the House acted.
Many Russian opposition figures, like Garry Kasparov, supported it for a different reason. It had been paired with something called the Sergei Magnitsky Rule of Law Accountability Act. Magnitsky, you may recall, was the young Russian lawyer who tried to expose a huge tax fraud involving a number of high-ranking officials. His efforts led to his imprisonment, where he was grossly mistreated and deprived of medical treatment. And he died. The Magnitsky act would prevent his jailers — and other human rights abusers — from entering the country, and it would have frozen their assets as well.
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Nocera Hits the Bulls-Eye on Magnitsky Act
Seth Mandel
04.17.2012 – 12:45 PM
President Obama has been decrying “the way Congress does its business these days” and promising to act “with or without this Congress,” so fed up is he by the lack of bipartisan solutions coming from the legislative branch. So the president, one would think, would be delighted that Congress has come together to produce a bipartisan, popular bill that would also give the president a strong foreign policy move while simultaneously beefing up his credentials on human rights and democracy.
I’m talking, of course, about the “Sergei Magnitsky Rule of Law Accountability Act of 2011,” a bill that would sanction Russian human rights offenders. It is named after the Russian attorney who was detained without trial for investigating Russian corruption and then beaten and left to die in prison. It is intended to replace the Cold War-era Jackson-Vanik amendment, aimed at getting the Soviet Union to allow Jewish emigration, but which is outdated and will likely be repealed now that Russia is joining the World Trade Organization. The bill was introduced by Democratic Senator Ben Cardin and has broad bipartisan support. But Obama staunchly opposes the bill. Today, New York Times columnist Joe Nocera adds his voice to the growing chorus of commentators, both liberal and conservative, who support the bill:
I have to confess that when I first began receiving press releases about this effort, which has gained traction in Europe as well as the U.S., I didn’t take it very seriously. Visa restrictions didn’t seem like much of a price for allowing an innocent lawyer to die in prison. But after watching the reaction of the Russian government, which has repeatedly and vehemently denounced the bill — and which is now, out of pure spite, prosecuting Magnitsky posthumously — I’ve come to see that it really does hit these officials where it hurts them most.
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Turning the Tables on Russia
The New York Times. The Opinion Pages
By JOE NOCERA
Published: April 16, 2012
Who knew that what corrupt Russian officials care about, more than just about anything, is getting their assets — and themselves — out of their own country? They own homes in St. Tropez, fly to Miami for vacation and set up bank accounts in Switzerland. They understand the importance of stashing their money someplace where the rule of law matters, which is most certainly not Russia. Besides, getting out of Russia is one of the pleasures of being a corrupt Russian official.
As it turns out, a man named William Browder knows this. As does Senator Benjamin Cardin, a Democrat from Maryland. As do plenty of other senators, on both sides of the aisle.
As a result, the Senate Foreign Relations Committee will likely report out a bill in the next few weeks that would force the State Department to deny visas, and freeze the assets, of Russian officials who are labeled “gross human rights abusers.” After that, it will be attached to an important trade bill that the Democratic-led Senate and the Republican-controlled House need to pass later this summer. Which would make it a rare and welcome moment of bipartisanship in this rancorous political season.
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Why Khodorkovsky Matters
Over the past six months, I’ve written three columns about Mikhail Khodorkovsky, the former Russian oligarch who has been in prison since 2003, charged, tried, convicted — and recently reconvicted — on transparently bogus tax and embezzlement charges.
Partly, I keep returning to the subject because his lengthy imprisonment offends my sense of justice; his real crime, after all, was challenging Vladimir Putin, the Russian strongman. More importantly, Khodorkovsky’s fate stands as a powerful illustration of Russia’s biggest problem: the contempt the country’s corrupt rulers have for the rule of law.
Yet after each of those columns, I received feedback saying, essentially, that Khodorkovsky deserved what he got. Even if the crimes for which he went to prison were fictitious, he undoubtedly did bad things on his way to becoming Russia’s richest man. “He stole Russian national resources, truly the wealth of the nation,” read one e-mail, referring to Khodorkovsky’s role in founding the now-defunct oil company Yukos. “I have zero sympathy for him.”
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